Wellington is considering creating an urban development agency to to play the property market and drive major developments.

Wellington City Council is set to become a bigger player in the property market after councillors voted to get the ball rolling on an urban development agency for the capital.

The agency would be a council-controlled organisation with a mandate to purchase and assemble land, partner with developers, and deliver projects that fit with council's Urban Growth Plan.

Its goal will be to address "market failure" and bridge the gap to development.

PHOTO: CAMERON BURNELL/ FAIRFAX NZ

Wellington City Councillors will seek public feedback on the idea of forming an urban development agency.

Its actual structure and mandate is yet to be decided. But it is expected the agency would facilitate projects like medium-density housing, big infrastructure projects in high-profile locations, redevelopment of tired areas, such as Adelaide Rd, and redevelopment of areas where earthquake-prone building issues are slowing the market response.

"This should not be used as a means to shove medium density housing through the back door," she said.

Her suggestion was voted down, with several councillors claiming the agency could be a useful tool for getting better quality homes in suburbs like Johnsonville and Kilbirnie, where there is provision for medium-density housing.

Councillor Jo Coughlan said an agency would do great things for the capital. She pointed to the example of Melbourne, where the state-led urban regeneration of the Docklands precinct had attracted $10 billion in private investment.

"I see this as crucial if we're going to get more projects and big investment into the city."

Councillor Ray Ahipene-Mercer also supported the agency idea, pointing out that Wellington's waterfront would be a "shambles" today if it hadn't forced a council-controlled organisation to look after development of the area.

"We [councillors] wouldn't have made any decisions, and nothing would have been done down there."